Search Results For: taxability


QUERY: A Ltd. has a brought forward losses of Rs. 1/- crore. During the F.Y. 2012-13, it has sold the depreciable asset being office premises which was purchased 5 years ago. The sale value is Rs. 5/- crore and the W.D.V. of said premise is Rs. 1/- crore.

A Ltd. wishes to adjust the brought forward business loss of Rs. 1/- crore against the deemed Capital Gain u/s. 50 relying on the Mumbai Tribunal decision in case of Digital electronics reported in 49 DTR 484.

The tax advisor of A Ltd. do not agree with the action of A Ltd. as regard the set off of business losses against the short term capital gain computed u/s. 50 in view of special bench decision in case of Nandi Steel reported in 134 ITD 73 (Bom.)
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Yes, the income tax is one tax. Section 14 of the Act, classifies the taxable income under different heads for the purpose of computation of net income of the assessee. Though, for the purpose of computation of the income,

QUERY: Mr. X has purchased single premium money back plan of LIC; called New Bima Bachat Policy. Sum assured is Rs. 7,00,000/-. He has paid a single premium of Rs. 5,59,843/-. He will be getting Rs. 1,05,000/- as survival bonus after every three years from LIC during the span of 15 years and there after the sum assured with Bonus on maturity.

The survival bonus and sum assured with bonus, receivable during the life time of Mr. X, is taxable in his hands as there is no exemption available as per the provisions of section 10 (10D) of the Income tax Act. There will be TDS also on this amount. Mr. X has not claimed deduction under section 80C on this premium paid, which in any case would have been Rs. 70,000/- only.

In this connection, the following questions arise:

1. Is there any specific provision under the Income tax Act by which this amount is taxed under the head “Income from other sources”?

2. Is it possible to show the income under head Capital Gain?

3. Is there any provision to claim the investment made in the policy as cost against the survival benefits?

4. If yes then how the same is to be claimed i.e. can one claim the cost by dividing it against the survival benefit receivable after every three years and then pay tax on entire amount received on maturity.


5. If the investment made is not allowed to be deducted from the survival amount receivable, will it not be unconstitutional as this will amount to taxing gross receipt and not income.
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From the facts, it is clear that Mr. X has taken money back insurance policy called as New Bima Bachat Policy. As per the terms of the said policy, it is a single premium payment policy, where sum assured will be paid back to the policy holder in the form of survival benefit periodically.

QUERY: Does section 50C applicable to a gift of a flat to a non-relative? What would be implication under section. 50C as well as section 56(2)(vii) if such gift is revoked afterwards?
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A gift to non relative would attract section 56(2) and would be assessed in the hands of the recipient. In such case section 50C would not be attracted. Section 50C would be attracted when there is transfer of capital assets

QUERY: A firm having three partners and doing construction work.

In the said firm, there are tippers and JCB machines standing in balance sheet for business purpose.

Out of three partners, one partner wants tipper and another partner wants JCB machinery for his individual business purpose.

Can it be the transferred by debiting their capital account and crediting machinery account during the continuation of partnership business with-out attracting capital gain tax.

What will be position, if the said transaction is effected on dissolution of firm?

Further, if the firm is decided to be dissolved on April 01, 2016 and the said transaction is made then as to whether the entry is to be passed on March 31, 2016 or April 01, 2016 and in that circumstances as to which date will be treated for taxation purpose i.e. March 31, 2016 or April 01, 2016 and in which year liability to pay income tax, if any, will arise?
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If plant and machinery are withdrawn by the partners at book value during the continuance of partnership firm, then, the same can be debited to partners ac-count and credited to plant and machinery account in such case there is no question of any liability of capital gains. [See Malabar Fisheries Co. [120 ITR 49 (SC)]

QUERY: Assessee had borrowed loan from bank for purchase of machinery and working capital as under:

• Term Loan Rs. 100/- crores.

• Working Capital Rs. 90 /- crores.

It also had certain unpaid interest of Rs. 30/- crores. Out of this Rs. 30/- crores Rs. 12/- crores was capitalised with machinery.

Due to certain reasons company has entered into debt restructuring with the bank and amount borrowed was partly waived as under:

Term Loan Rs. 15/- crores

Working Capital Rs. 5/- crores

Interest Rs. 20/- crores

What tax treatment to be given on waiver of loan?
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On debt restructuring with bank, the bank has waived Rs. 15/- crores out of term loan of Rs. 100/- crores, which was taken for purchase of machinery. So, the loan was for purchase of a capital asset and the same was not debited to trading account or profit and loss account and therefore remission of that liability cannot be treated as income under section 41(1) of the Act. See Mahindra and Mahindra Ltd. v. CIT [261 ITR 501 (Bom.)] and CIT v. Xylon Holdings (P) Ltd. [26 Taxmann.com 333 (Bom.)].